The wrong jobs formula

The public and the pols aren't buying Obama's plan.

September 19, 2011

President Barack Obama tries to rally support for his jobs plan Tuesday at a high school in Columbus, Ohio. (Mandel Ngan, Getty-AFP photo)

Elizabeth Warren is a staunch Democrat who recently left the Obama administration to run for the Senate in the unusually liberal state of Massachusetts. When asked if she would vote for the jobs plan proposed by her former boss, Warren didn't hesitate. "I'm my own person, and I've been talking about my set of issues for a very long time." Translated: Don't try to hang that one on me.

The president wants to show the country he's serious about boosting employment, which he proposes to do with a $447 billion package that bears an eerie resemblance to his 2009 stimulus effort. But the country isn't buying. A recent Bloomberg poll found that 51 percent of Americans don't think the jobs bill would have the desired effect.

They may never find out, since it faces strong opposition in Congress. Conservative Democrats say they have no interest in voting for Obama's proposed new spending. Among liberals, there is some resistance to cutting employer payroll taxes. Republicans are, shall we say, even less receptive to Obama's demands.

The skeptics are on solid ground. When he signed the original $787 billion stimulus measure, the president said it would create or save 3.5 million jobs. Instead, employment has dropped by 1.7 million. The administration is not wholly at fault: The economy was weaker then than anyone realized. But the spending measures simply didn't have anything like the payoff that was promised.

History suggests when the economy suffers a contraction of the sort that followed the 2008 financial panic, recovery comes slowly. The immediate problem is low demand, and the grim reality is that no one really knows a reliable way to raise it. Given time, it will come back.

Obama, however, pretends that Washington has a magic elixir that will goose growth right now. The evidence of the last two years does not support him. The chief result of his efforts so far has been a rise inthe national debt, putting a heavy burden on future taxpayers. The jobs program would replicate that mistake.

The folly here is trying to juice up the job market in the short run at the expense of what the economy needs in the long run. House Speaker John Boehner's Thursday speech to the Economic Club of Washington had a less jazzy but more realistic formula.

One big piece: "broad-based tax reform that will lower rates for individuals and corporations while closing deductions, credits and special carveouts." Another is addressing the spending binge of the last few years, a job that, as Boehner acknowledges, will require curbs in entitlements like Social Security and Medicare. Curbing excessive regulation is also needed to reduce the uncertainty that hangs over business owners, discouraging them from hiring.

The federal government can't do much to boost employment in the near term, though it can do a lot to depress it. What it can do on the positive side is create an environment in which the private sector can plan and operate without fear of rising taxes and growing bureaucratic interference, thus fostering a prosperity that will last. Americans seem to understand that, and their elected officials may finally be catching on.